Which of the Following Are Two Methods of Analyzing Capital

question 22

Multiple Choice

Which of the following are two methods of analyzing capital investment proposals that both ignore present value?

• A) internal rate of return and average rate of return
• B) net present value and average rate of return
• C) internal rate of return and net present value
• D) average rate of return and cash payback method

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Definitions:

Standard Deviation

A measure of the dispersion or variability in a set of data points, often used in finance to indicate the volatility of an investment.

Beta

An indicator of the level of fluctuation, or inherent risk, of an investment or group of investments relative to the overall market.

Dollar-Weighted Return

A method of calculating an investment's return that takes into account the timing and amount of cash flows into and out of the investment.

Time-Weighted Return

A method to measure the compound rate of growth in a portfolio, eliminating the effect of cash flows in and out of the portfolio.